Global Headphone Giants are Edging Out Their Own Retailers

When was the last time you bought something on Amazon? Yesterday? Thought so. Honestly, the thought of skipping long lines and adding an additional ride on a crowded subway to purchase any sort of good makes online shopping so appealing. That’s probably why 51 percent of Americans prefer to shop online. While this shift in shopping trends still yields a win-win for manufacturers (sales-wise), it’s actually hurting manufacturers’ brick and mortar retailers.

Global Headphone Giants are Edging Out Their Own Small Retailers

In the world of retail there are manufacturers and dealers. Manufacturers make the product and most acquire various retailers/dealers to sell their product for them. In doing so, manufacturers do not have to invest in a storefront and individuals to learn and sell their product for them. Dealers, essentially handle that for them. Dealers purchase an item from manufacturers at a dealer price and sell it at the market price. This yields what is normally a small margin of profit for retailers. However, if they purchase large quantities of a major product, say Sennheiser HD 660 S, and can move all of them, then they’re making more profit. But, if a manufacturer is able to move all of the unit themselves, without small dealers, there’s way more profit for them to make.

This is where we get to our current issue. Ever go to a small, yet specialized store to get a new product you saw listed on a manufacturer site, only to find it’s not available at that store yet? I have, mainly in the case of headphones. Basically, these dealers are making sure you can only get their new product from them. Business being business, this makes sense. But companies like Sennheiser, are placing their newest items, the Sennheiser HD 660 S for instance, under an embargo with these retailers with terms preventing them from even listing the product as a pre-order item. I know for a fact some of their brick and mortar locations have the highly anticipated open-back headphone is perched on the back shelf of a stockroom  which means those retailers can’t even capitalize on capturing some of those local customers looking to place an order in the rush of anticipation of a new product. Beyerdynamic also pulled a similar move. Their new Aventho wireless, which appears to be a Bluetooth version of the T5i, was announced in August and said to hit the market in October. As of now, it’s listed on Beyerdynamic’s website for pre-order, but these headphones aren’t even available for dealers to pre-order and ready on their own site. not until Beyerdynamic decides dealers can have it. The way I see it, these manufacturers are trying to have their cake and eat it too. As a huge headphone giant, they’ll surely receive pre-orders on a new item. In fact, even if small retailers took pre-orders for a new product, it’s not like they can ship the products until they’ve received it from manufacturers.

It seems like the best way a smaller retailer can survive is to yield to manufacturers’ demands. There’s also the option of aligning themselves with brands who are more fair with their dealers, like Audio Technica. The Japan-based audio company’s new ATH-M50xRD Limited Edition Headphone was listed for pre-order on various sites as soon as the announcement was made. Those cans were also ready for purchase as soon as they arrived in-stores.

This notion hurts small retailers, but it is in no doubt an effort to move into a business-to-consumer model, something like major athleisure brand Nike. They recently announced their plan to downsize from 30,000 retailers to 40. Yep, that’s it. Those retailers are obviously major retailers with one being a multi-chain specialized shoe store and the latter a high-end department store. Both will wind up making large purchase orders for Nike products while Foot Locker will also, if not already, feature a dedicated Nike section of the store with dedicated Nike staff to sell their shoes. The move to online sales while also cutting back on retailers is inherent of a direct-to-consumer model. As Nike Brand President Trevor Edwards said, “Make sure that nothing stands in the way of getting that consumer the exact product they want at the exact moment they want it.” So, “Skip standing in line, order online, and we’ll get your item to you in an Amazon-primesque fashion,” should be the correct translation.

In the end, there is going to be a major struggle. It’s summed up best by Nike’s Edwards who also said, “Undifferentiated mediocre retail won’t survive.” Translation, “May the odds be ever in your favor.”